from briefing.com. ps: Briefing usually is very tough on ORCL, but this time...
.......ORACLE CORP. (ORCL) 36 7/8. Slower than expected revenue growth looks like it will hurt the
stock price this morning. After the close Thursday, database software company Oracle (ORCL)
reported solid profit numbers and much better growth in the recently troublesome Asian region.
However, the "bottom line" is that the top line was not up as much as in recent quarters, and ORCL
is indicated to open as much as 6 points lower. Specifically, total revenue was up 19% in the fiscal
third quarter (Feb) from the year-ago level. Year-over-year revenue growth the past three quarters
had been 26.3%, 27.9%, and 27.4%. So, this 19% number is down from the recent trend. ORCL
also reported profits of $0.20 per share, the classic penny ahead of expectations, and up an
impressive 30% on a per-share basis from the year ago $0.14 per share. Certainly nothing wrong
with those numbers. However, the stock has made a huge move up lately, and when that happens,
any disappointment in a report can hurt a stock. ORCL has jumped almost 150% from 15 in
October. That has raised the trailing 12-month price/earnings multiple (P/E) on the stock to a fairly
high 46. After such a move, it is not all that surprising that the stock would encounter some selling.
However, even 19% revenue growth is pretty solid for a company the size of ORCL, and they are
apparently able to manage very strong profit growth on such revenue growth. ORCL also said that
revenue in the recently troublesome Asian region rose 25% (19% excluding currency impacts), and
revenue growth around the world was fairly balanced. ORCL emphasized recent product
introductions and their participation in the Internet, as CEO Ellison said "just about every major
Internet site in the world uses Oracle." They also downplayed the lower year-over-year revenue
growth, noting that the prior year quarter had very strong revenue growth, making this quarter a
difficult comparison. The CFO had a statement in the press release saying that the sequential
quarterly growth reflects growth consistent with long-term trends. Briefing.com agrees with this. The
stock may take a short-term hit, but there is nothing wrong with ORCL's numbers. A drop in the
stock price is just taking some air out of the recent move. It is premature to suggest that there has
been a fundamental shift in the outlook for ORCL. That doesn't necessarily mean any dip is an
immediate buying opportunity, but we also certainly don't think there is any reason to panic here. |
